February 2013 San Joaquin Business Conditions Index
For More Information Contact:
Ernie Goss Ph.D., 559-278-2352
University Business Center
Craig School of Business
California State University, Fresno
San Joaquin Valley Leading
Economic Indicator Advances Again
February survey results at a glance:
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Leading economic indicator expands for a third straight month.
Export orders contract again.
One-fourth of businesses expect that federal sequestration will have a negative impact
on company sales.
Approximately 42.9 percent of firms expanded sustainable purchasing programs over
the past two years.
PMIs for U.S. & San Joaquin Valley, 2010-13
65
U.S.
San Joaquin Valley
60
55
50
45
40
For Immediate Release: March 1, 2013
Fresno, CA –The San Joaquin Valley Business Conditions Index advanced for a third
straight month. The index is a leading economic indicator from a survey of individuals making
company purchasing decisions in firms in the counties of Fresno, Madera, Kings and Tulare.
San Joaquin Business Conditions Index – p. 2 of 4
The index is produced using the same methodology as that of the national Institute for Supply
Management (www.ism.ws).
Overall Index: The index, produced by Ernie Goss Ph.D., Research Associate with the
Craig School of Business at California State University, Fresno, expanded to 55.2 from 54.0 in
January and 52.6 in December. An index greater than 50 indicates an expansionary economy
over the course of the next three to six months. Survey results for the last two months and one
year ago are listed in the accompanying table. “
“Improvements in the area’s housing sector along with manufacturing growth pushed the
overall index higher for the month. The February reading was slightly higher than the national
ISM reading of 54.1. Both readings point to a slowly expanding economy,” said Goss.
Employment: For a fourth straight month, the hiring gauge moved above the growth
neutral threshold. However, the job index slumped to a tepid 51.1 from expanded slightly to
56.3 in January. The February 2013 index is well above the February 2012 reading of 44.8.
“Readings over the past several months indicate that the job market has been expanding and
will continue to improve, albeit at a slow pace,” said Goss.
Wholesale Prices: The prices-paid index, which tracks the cost of raw materials and
supplies, expanded to 66.0 from January’s 63.9. “The Federal Reserve Open Market
Committee, which sets U.S. interest rate policy remains committed to their current aggressive
‘cheap’ money policy. While it has not sparked any significant inflationary pressures for U.S.
consumers, this policy is boosting our wholesale inflation gauge and is pushing U.S. asset
prices up at a pace that is causing disruptions in certain sectors of the economy such as
agriculture,” said Goss.
Business Confidence: Looking ahead six months, economic optimism, captured by the
business confidence index, rose to a level that still indicates pessimism regarding the area’s
economic outlook. The February business confidence index increased to 43.6 from January’s
41.2 and December’s much weaker 37.0. “Uncertainty surrounding sequestration and
healthcare reform continue to lower business confidence. This month we asked survey member
how the upcoming sequestration would affect their company’s sales. One-fourth expect the cut
in federal spending to result in a reduction in unit sales for their company. It is clear that this
weighed on the economic outlook this month,” said Goss.
”Inventories: Businesses contracted inventories for the month. The February index
rose to 51.3 from January’s much weaker 42.6. “Sluggish growth in inventories are yet another
indicator of weak business confidence,” reported Goss.
San Joaquin Business Conditions Index – p. 3 of 4
Companies in the region continue to expand “sustainable” procurement policies. This
month approximately 42.9 percent of firms indicated that they had expanded sustainable
purchases of raw materials and supplies over the past two years. On the other hand, 33.2
percent reported no change and 23.9 reported a reduction in sustainable buying over the two
year period. .
Trade: New export orders weakened for February with a reading of 44.2 which was
down from January’s 46.1. At the same time, December imports expanded for the moneth with
an import index of 51.9, up markedly from January’s 42.3. “As our overall regional gauge moved
above growth neutral for February, so did purchasing from abroad. On the other hand, economic
weakness among the region’s important trading partners weighed on exports,” said Goss.
Other components: Other components of the February Business Conditions Index were
new orders at 58.1, up from 55.4 in January; production or sales at 55.6, down from 57.2 in
January; and delivery lead time at 59.6, up from January’s 58.7,
Table 1 details survey results for February 2012, January 2013 and February 2013.
March survey results will be released on the first business day of next month, April 1.
San Joaquin Business Conditions Index – p. 4 of 4
Table 1: Overall and component indices for last 2 months and one year ago (above 50.0
indicates expansion)
San Joaquin Valley
February 2012
January 2013
February 2013
Leading economic indicator
50.1
54.0
55.2
New orders
50.3
55.4
58.1
Production or sales
50.8
57.2
55.6
Employment
44.8
56.3
51.1
Inventories
49.5
42.6
51.3
Delivery lead time
55.9
58.7
59.6
Wholesale prices
62.4
63.9
66.0
Imports
48.6
42.3
51.9
Export orders
58.9
46.1
44.2
Business confidence
47.3
41.2
43.6
Craig School of Business: http://www.craig.csufresno.edu/
Follow Goss: Twitter at http://twitter.com/erniegoss or www.ernestgoss.com